KCA Wealth Management understands the importance of planning for your life and its many uncertainties. Each and everyone’s individual plans vary greatly, depending on factors such as incomes, goals, and even children. As we all learn in time life is extremely unpredictable, such is why life and financial planning must be tied together. Although many of us plan for consistent dual incomes, an early retirement and steady career growth, reality often lands elsewhere. From economic depressions to unexpected health surprises, financial planning is just as essential as life planning. Tasks such as ensuring insurance is adequate for your household ensures your financial plan doesn’t end in ruins.
Financial planning focuses on an individual’s long-term financial goals and creates a strategy for achieving them. Life planning focuses on insurance to protect oneself and one's family members from future financial difficulties by removing some financial uncertainties and helping individuals fulfill their life plans even after they experience certain challenging life events. Each has its own importance, but ensuring they work together is essential.
Ensuring Your Plans Work Together
We have previously discussed the importance of protecting your assets for your heirs, adequately planning for healthcare costs in retirement, and building a financial plan. These are all an important start to understanding the importance of building plans. Once your financial plan is completed, you will have a great outline for the future. However, life planning will ensure that stays on track be it an injury or loss of income down the line. Carrying insurance, such as life insurance, can ensure your children and spouse aren’t also financially destroyed due to a tragic death. Further, disability due to injury could leave your financial situation in a dire situation due to no fault of your own. Proper disability insurance coverage can ensure your family isn’t swept off their feet and proper recovery can be made.
Other insurance products, such as long-term care insurance, which we’ve previously covered in ensuring adequate healthcare cost planning, is also essential. Even those that have saved and invested well can be left bankrupted by expensive full-time care costs due to certain disorders and diseases late in life.
It was recently reported 18% had to leave because their health negatively impacted their ability to work, while 9% simply lost their job and could not find another late in life. Although many believe it could never happen to them, consistent automation and technology put many jobs at risk; even as long ago as the 16th century!
Although many can agree that insurance is important to hold, it can be very confusing when analyzing. Like any financial product all insurance coverages have their own costs, which can eat into your potential savings in your financial plan. Further, knowing the exact levels of coverage needed can be overwhelming. With a proper financial plan prepared, estimations can be made if a case of income loss ever occurs. That is why it is essential a plan is reviewed with a financial professional at KCA Wealth Management. Oftentimes individuals can be oversold on coverage they may never need, requiring them to work and save well beyond a standard retirement date.
Other unforeseen circumstances, such as unexpected early retirement, or absence from the workforce, due to caregiving responsibilities for a family member often occur. Although these situations are often financially detrimental, in life nothing is more important than ensuring you can provide for your family physically, emotionally and financially.
Tax and Estate Implications
Ensuring your plans work together is also essential to ensure you and your family pay minimal taxes and transactional fees during not only your lifetime, but also your heirs. A proper plan takes into consideration your anticipated and current holdings, and can help insure and protect assets that are owned, while transferring those assets in time.
We have covered extensively the importance of estate planning. Proper estate planning, which includes planning and development of wills, trusts, charitable donations, taxes, life insurance, retirement accounts, and healthcare costs is essential to ensure you exceed your retirement goals and adequately protect your assets for your heirs.
Even significant withdrawals during retirement, could lead to unanticipated taxes and sequence of returns risk. Many of these risks can be eliminated, or at the very least minimized, with proper planning.
At KCA Wealth Management our mission is to be there every step of the way in supporting the members of our community with the financial and educational resources they need and deserve to prosper in retirement. Regardless of your stage in life, we will be there in assisting you plan and execute for a worry free and fulfilling retirement, so you can focus on what matters most to you